services tax. This has helped streamline compliance, Sripada says. Along with the opportunity India offers, businesses need to tackle several signi cant challenges if they wish to expand their supply chains there. One challenge is the multiple, often unwieldy layers of federal and state government. To navigate them, companies can work with an advisor or partner that has solid experience setting up operations in India and understands the regulatory and compliance requirements. In addition, labor groups are becoming more in uential, Deshmukh says. In 2024, one group shut down a Samsung plant for more than one month. MANAGING DELAYS AND SHORTAGES Companies operating in India often must manage material delays or shortages, too, and longer delivery times of both materials and nished products—all while working with limited visibility into the supply chain. They can reduce the impact of these challenges by diversifying their supplier base, sourcing locally to the extent possible, leveraging automation and inventory management systems, and establishing strong connections with their business partners and regulators, Heragu says. Because the warehousing and transportation infrastructure in India is not as mature as it is in some other countries, companies setting up a supply chain in India may need dozens of smaller distribution sites, Deshmukh notes. In contrast, in more developed countries of roughly the same size, a company may be able to operate three or four mega-warehouses, which often can accommodate more advanced automation. Most organizations that have succeeded in India operate in a slightly Indian manner, rather than simply applying a global blueprint, Datta explains.
India’s Business Hotspots India is the seventh-largest country in the world by area and the second most populated. It’s made up of 28 states, along with eight union territories. As companies develop their strategy for India, they must carefully assess locations to ensure alignment with their goals. This includes evaluating local demand across dierent regions and considering state-specific incentives. “It’s a jigsaw puzzle that organizations need to solve,” says Bitan Datta of Boston Consulting Group. Here are some hotspots to consider: BANGALORE , HYDERABAD , and PUNE are prominent IT centers in India, contributing to the country’s technology and innovation landscape. Bangalore is often referred to as the “Silicon Valley of India” and is home to numerous global technology companies, Indian tech giants, and a thriving startup ecosystem. Hyderabad and Pune have become vibrant IT hubs for global tech firms and Indian enterprises. • India also has several major port cities. MUMBAI and GUJARAT , along the west coast, oer access to western parts of the globe. Mumbai is the largest container port and key hub for international trade. Mundra Port in Gujarat is growing rapidly and is one of the largest private ports in India. On the east coast, Chennai Port is one of India’s oldest and largest ports. DELHI , as the capital city of India, holds a strategic position for businesses considering its proximity to government and central location. It’s also an economic and talent hub, and oers access to transportation to major cities and regions in North India. MUMBAI
India oers one of the largest pools of highly educated professionals with expertise in both supply chain and technology. Much of its workforce also speaks English, which is ideal for global business transactions. The incentives currently offered by India’s government help offset the generally higher logistics and infrastructure costs in India, according to Bitan Datta, managing director and partner with Boston Consulting Group’s manufacturing and supply chain practice. The incentives help bridge the gap as the government works to bring these costs closer to the global average. India has also seen signi cant infrastructure investment in recent years. The Vande Bharat trains, India’s rst indigenous semi-high-speed trains, are one result of Prime Minister Modi’s “Make in India” campaign, which launched in 2014. As of September 2024, more than 100 Vande Bharat train services were operating across Indian Railways. Also, in 2017, India revamped its tax system to implement a Goods and Services Tax (GST) that replaced various indirect taxes, such as excise duty and
March 2025 • Inbound Logistics 31
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